SUMMARY - Machine, Platform, Crowd_ Harnessing Our Digital Future - Andrew McAfee & Erik Brynjolfsson

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Here is a summary of the key points:

  • Dan Wagner was inspired by how the Obama 2012 campaign used machine learning and extensive voter data to precisely target voters, going beyond traditional demographic approaches.

  • The campaign built models to predict individual voters' likelihood to support Obama, vote, and be persuaded. They matched these lists against viewership data to find the best TV shows for key voter groups.

  • This allowed them to identify unexpected but highly effective shows for reaching voters, like late night programming on TV Land, at lower costs than demographic-based targeting alone.

  • After the election, Wagner started Civis Analytics to commercialize this data-driven approach to media buying for companies. He argued companies also have detailed customer data that can optimize advertising placement in similar ways.

So in summary, the passage discusses how the Obama campaign pioneered a highly targeted, data-driven approach to voter outreach, and how Wagner saw its potential for commercial applications in audience targeting and advertising optimization.

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  • Virtualization refers to digitizing processes and transactions that traditionally involved in-person interactions. This reduces the need for human contact and can automate certain steps.

  • Eatsa Restaurant demonstrated how an entire meal ordering and pickup experience could be virtualized through tablets, automated kitchen prep, and a cubby pickup system without any servers.

  • Other industries like travel have increasingly virtualized aspects like downloading boarding passes, automated security/customs, reducing airport employee interactions.

  • Banking has largely virtualized through ATMs, online/mobile banking, allowing finances to be managed remotely without tellers.

  • While some transactions still require in-person interactions now due technical limitations, the technology is improving. Frictionless experiences through computer vision, AI, etc. could virtualize more processes that were previously not possible without human involvement.

  • Overall, virtualization is accelerating as digital tools become more advanced and ubiquitous, automating workflows between businesses/customers online without physical interactions.

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  • In the mid-1990s, major industries like newspapers, radio, recorded music, telephones, and retail were thriving under existing business models not yet disrupted by the internet and digital technologies.

  • Newspaper revenues were high, radio stations numbered over 10,000, and the music industry was a $14 billion business supported by physical album sales. Shopping malls were also dominant retail spaces.

  • However, new internet technologies like broadband connectivity, streaming media, e-commerce, and digital file sharing emerged in the late 1990s and 2000s that fundamentally disrupted these industries by allowing digital content to be shared nearly free of cost globally.

  • Major declines followed - newspaper revenues dropped 70%, 13,400 newspaper jobs were cut, music sales fell 45% globally from 1999-2014 as downloads and streaming rose. Many retail stores and radio stations struggled to adapt.

  • Industries failed to adapt their business models to the digital era where content could be endlessly copied and shared online without physical scarcity constraints, showing how quickly the internet can disrupt established revenue models.

In summary, several thriving industries in the mid-1990s saw dramatic declines within one generation due to digital disruption of their existing business models by new internet and sharing technologies.

Here are the key points from the passage:

  • ClassPass initially offered an "Unlimited" membership model that proved unsustainable as too many members took classes frequently, negatively impacting finances.

  • Exercise studios using ClassPass have finite class capacity. ClassPass had to balance filling otherwise empty spots versus limiting reservations to leave room for full-paying regular studio members.

  • Revenue management techniques helped optimize inventory allocation based on demand and willingness to pay, using data and algorithms to sell inventory to higher-paying customers first.

  • Convinced skeptical studios to try letting ClassPass manage a class or two's reservations. Studios saw benefits like fewer last-minute empty spots as ClassPass reserved spaces closer to class time, gaining their trust in the revenue management approach.

  • The lesson is that an "unlimited" usage business model may not be viable, and revenue management strategies that optimize inventory allocation can help platforms like ClassPass balance the interests of different user groups in a two-sided marketplace.

    Here is a summary of the key points:

  • ClassPass faced challenges balancing the interests of fitness studio partners and users on its marketplace platform.

  • As user attendance grew, ClassPass' costs increased proportionally while revenues only grew with total users. This threatened profitability.

  • To address this, ClassPass had to manage capacity constraints at studios and incentivize both sides of its two-sided marketplace.

  • It was important for ClassPass to maintain good relationships with studio partners while still attracting new users. Carefully balancing the interests of both sides was key to the sustainability of its business model.

  • Techniques like revenue management, rotating class availability, and incentivizing certain studios over others at different times helped ClassPass optimize supply and demand on its platform.

So in summary, maintaining a balanced and mutually beneficial marketplace for both fitness studios and users was crucial for ClassPass as it grew, given the inherent constraints of its industry. Careful management of both sides was necessary.

Here is a summary of the key points:

  • MakerBot donated 3D printers to Owen and Van As to help generate prototypes for prosthetic hands more quickly.

  • They were inspired by plans for an old 19th century prosthetic and built their own version called "Robohand" for a boy born without fingers.

  • Rather than patent it, they shared the 3D printing plans online, enabling decentralized worldwide production and refinement of the design.

  • Over 1,800 printed hands have since been created for people in over 45 countries through this open source model of distributed collaboration online.

  • 3D printing allowed the cost of a basic prosthetic to drop over 99%, demonstrating how crowd-powered innovation through open sharing of designs can drive down costs and increase accessibility of assistive technologies on a global scale.

    Here are the key points:

  • While new technologies like blockchain, smart contracts, and decentralization aim to reduce transaction costs and the need for centralized organizations, companies still provide important advantages.

  • Contracts will always be incomplete due to the inability to foresee every possible future scenario. Companies provide residual control rights over assets to address uncertainties not covered by contracts.

  • Coordination and decision-making also become complex at large scales, requiring leadership structures that companies supply through centralized management hierarchies.

  • Early decentralized projects like The DAO and Bitcoin mining centralization showed that fully replacing companies with code and crowds is difficult to achieve in practice due to governance and strategic challenges over time.

  • While digital technologies lower some transaction and coordination costs, factors like asset specificity, uncertainty, and complex adaptive problem-solving continue to give companies comparative advantages over pure market coordination according to transaction cost theories.

  • New systems may find roles in streamlining processes and transactions, but fully decentralized substitutes for hierarchical companies face significant hurdles providing the same advantages that make companies the dominant organizational form in most industries and sectors of the economy.

    Here is a summary of the key points:

  • Technologies like artificial intelligence, robotics, and digital platforms are enabling new business models that disrupt traditional industries. However, companies will continue serving important economic and coordination functions due to some inherent limitations of technologies and decentralized models.

  • While individuals and contracts provide flexibility, companies provide more stability through their long-term orientation, established legal frameworks, and ability to coordinate complex activities. Even disruptive companies like Uber and Airbnb still utilize traditional corporate structures.

  • Management remains critical for navigating complexity through social skills like problem solving, communication facilitation, and persuasion/motivation. Successful companies emphasize ideas from all levels through experimentation rather than bias, opening opportunities despite risks.

  • Contracts inherently remain incomplete, so companies will still be needed to provide the stability, coordination, and management functions that decentralized models cannot fully replace. While technologies enable change, core economic and organizational needs mean companies are likely to continue playing an important role.

    Here is a summary of the key points in the provided text:

  • Major magazines like Newsweek and The New Republic struggled financially in the 2000s-2010s as print circulation declined in the digital age. Newsweek ceased print publication in 2012 while The New Republic was sold in 2016.

  • Playboy announced in 2015 it would stop publishing nude photos as part of a rebranding effort, though Hugh Hefner remained influential as chief editor until stepping down in 2017.

  • The recorded music industry saw global sales decline 45% between 1999-2015 from $27 billion to around $15 billion currently, as digital downloading and streaming grew in popularity.

  • Major music retailers like Tower Records and HMV declared bankruptcy in the 2000s as CD sales declined. Musicians also sought financing through music royalty-backed securitization deals.

  • Between 2005-2015, about 20% of U.S. malls closed as retailers such as Sears and Macy's cut stores due to declining sales. The real estate crash led to bankruptcies of mall owners like General Growth Properties.

  • Telephone companies like AT&T saw landline revenues drop significantly from 2000-2010 as cell phone use increased, while radio ad revenues also declined over this period.

In summary, the media and entertainment industries underwent major disruption and declining revenues in the 2000s-2010s due to technological changes that shifted consumption online and to digital formats. This resulted in business struggles, bankruptcies and restructurings across these sectors.

Here is a summary of the key points:

  • Governments and companies need to work together to manage the transition to automation and ensure its benefits are widely shared. Active management and long-term vision are required.

  • Governments should modernize education to emphasize skills like computing, science and engineering. They also need to make reskilling and lifelong learning affordable and accessible for workers.

  • Companies should automate ethically, have an open dialogue with stakeholders, and redeploy displaced workers internally or in new roles that integrate humans and machines.

  • If done correctly, automation can augment human capabilities and improve lives by freeing up time. But workers also need opportunities to actively reskill and learn new skills.

  • Job rotations, investing in communities, and creating new roles that combine humans and machines can help ease the transition and spread the benefits of automation.

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